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5. In terms of investment strategies, equity (stocks) is one of the principal asset classes. The other two are fixed-income (bonds) and cash/cash-equivalents. These are used in asset allocation planning to structure a desired risk and return profile for an investor's portfolio.
Equity (finance) In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owed. It is governed by the following equation: